Money's Too Tight To Mention - Motorcycle Racing's Biggest Problem

Submitted by David Emmett on Wed, 2014-11-05 09:35

What is the biggest problem in motorcycle racing today? Is it the predominant role electronics is playing, ruining the racing? Is it the ever more restrictive rules imposed, killing bike development and the spirit of Grand Prix racing? Is it the lack of competitive machinery, making it impossible for anyone but a factory rider to win a race? Or is it the dominance of the two top manufacturers, driving costs up and discouraging wider manufacturer participation?

You can point to all of those and more as being an issue, but they pale in comparison to the real problem the sport of motorcycle racing faces at the moment: Money. Specifically, the lack of it, and the inability of almost everyone involved in the sport to find ways of raising any. All of the ills of both MotoGP and World Superbikes can be traced back to this single failure.

The root of racing's problem is well-known. Once upon a time, when advertising tobacco products on TV and radio was banned, the cigarette companies needed some way of reaching potential customers. Spotting the loophole in the law, they immediately leaped on sports sponsorship as a means to promote their product. They went for sports which were glamorous, exciting, and had an edge of danger, exactly the image they want to project, and came up with motorsports.

Governments around the world saw the loophole they created, and started to close it down. After some clever negotiating by F1 supremo Bernie Ecclestone, motorsports were given an exemption until 2006, at which time all visible promotion of tobacco products in the sport's major markets was completely banned. The good times were over.

The retreat of the tobacco companies left motorcycle racing with not one, but two problems. The sponsorship money disappearing was bad, but even worse was the tobacco companies taking their marketing expertise with them. Teams were used to not having to deal with the marketing and sponsorship side of the business. Tobacco sponsors would offer the teams a complete package, complete with PR services, branding, marketing, customer relations, the works. The teams could get on with racing, their involvement in sponsorship consisting mainly of negotiating the amount involved. The tobacco sponsor would do the rest, organizing color schemes, hiring PR managers, writing press releases, hiring umbrella girls, running hospitality units. The tobacco companies took care of generating money, the teams focused on spending it.

When tobacco left, the teams were left floundering way out of their depth. They had never had to worry about raising money, and for the most part, had no idea where to start. Their first contacts with potential sponsors confronted with an even greater shock: the eagerness of tobacco companies to throw money at racing left the teams thinking that the sport was an attractive prospect for sponsors in general. In fact, the tobacco giants had only spent their money so freely because they had nowhere else to go. Time and time again, as team managers spoke to marketing managers in industries not subject to legal restrictions, they were surprised to find that just asking for money wasn't enough. They had to make the business case for sponsoring their team. This was a task they were woefully unprepared for.

The story they presented was less than convincing. Though MotoGP finds an audience all around the globe, it is most popular in Spain and Italy. Elsewhere it is less popular: it registers on the consciousness of the general public, but it is not a major sport. This is not Formula 1, or Champions League soccer, or tennis, or golf. Outside of its core markets, MotoGP does not get the exposure to justify huge investments from companies looking to reach large numbers of consumers. At first, the teams turned to Spain for their backing, and especially the companies which grew rich off the Spanish construction boom. When that bubble burst at the end of 2008, they were once again left out in the cold.

This is the real legacy of the tobacco sponsorship era. When they departed – all but Philip Morris, of which more later – they took their expertise in marketing, promotion, PR and sales with them. With a very few honorable exceptions, the teams have muddled along, relying on money from Dorna to be able to keep racing. Marketing and sponsorship is seen as something which comes after the fact, rather than the primary focus of any professional motorcycle racing team. Very few teams employ dedicated sponsorship and marketing managers, preferring instead to hand the responsibility to the team manager or another team member, to do alongside their main job. That leaves space for a pool of hangers on, who will chase sponsors to pair up with teams, taking a piece of the action for their efforts. The deals made are rarely either lucrative or effective for either side of the deal, the middle man not having the interests of either party in mind.

The absurdity of not hiring dedicated, specialist staff whose sole aim is to secure sponsorship and manage those relationships in the long term should be self-evident. A motorcycle racing team employ the best mechanics, data engineers, suspension technicians, crew chiefs and riders they can afford. Why they don't place the same demands on those charged with raising sponsorship is incomprehensible. Racing costs money, a lot of money, and raising it is not simple. It requires specialists, people who understand what sponsors need, what teams can offer, and how to build relationships which are beneficial to both. (I should know: despite MotoMatters.com being a well-read and highly respected racing website, my own lack of expertise in the field of marketing and advertising means the site struggles for income, rather than generating the kind of revenue it has the potential to.)

The real damage done by a lack of sponsorship expertise is most evident in the downward spiral of title sponsorship fees. Teams jump early to take some money, rather than wait, negotiate, and try to leverage more money from potential sponsors, adapting their proposals to the needs of the sponsors. This means that the cost of being a title sponsor has been driven down to a point which is less and less sustainable. Paddock insiders complain about all of the factories except Ducati, claiming that they are all underselling their sponsorship. What teams fail to understand is that by accepting low-ball sponsorship offers, they are driving down the value of sponsorship for everyone. Sponsors gossip among themselves, and will use information gained from their rivals to drive down the price of sponsorship even further. If the teams don't make a stand, turning down offers which are realistically too low to contribute to funding the team, then price pressure will continue on a downward trend. Talented and skilled sponsorship and marketing experts understand this, and can balance the needs of sponsors and the requirements of the teams.

So where is Dorna in this? Almost completely invisible, unfortunately. If the rights holders to MotoGP and World Superbikes have one single task, it is to promote the sport, and maximize the revenue generated from the two most important series in road racing. The show they put on is impeccable, well-organized, smooth-running and with an extraordinary safety record. They have managed to reduce costs, put on a great spectacle for the crowds, and enthuse a vast audience worldwide.

Capitalizing on the show is where Dorna fails most badly, however. Given the popularity of the sport and its potential around the world, the fact that they only manage to generate a little over €200 million a year is alarming. In comparison, Formula One has a turnover of €1.3 billion a year, and generates more in profit (€300 million) than Dorna does in turnover. Is F1 really six times more popular than MotoGP and World Superbikes combined? More importantly, is it really six times as lucrative?

I interviewed Carmelo Ezpeleta back in 2012, and touched on the subject of increasing revenues. Ezpeleta acknowledged this was a problem. "Increasing income is very difficult," he admitted. But instead of finding ways to fix this, his focus was on reducing costs. "It is exactly the same, if we talk about look at what is the problem in the south of Europe: they built a lot of houses that they don't sell. How you can sell a lot of houses? Reducing a lot the price." The global economy has recovered a lot since 2012, yet the focus of Dorna remains cutting costs, rather than trying to generate new income, and open up new channels of revenue.

Yet Dorna have made some attempts in this area. In 2007, they organized a special sponsorship conference, complete with workshops and top speakers. The feedback I have had from several attendees has been unanimous: nice try, but a complete waste of time. The results speak for themselves: sponsorship remains hard to find, and teams are still struggling with the process of finding new sponsors and persuading them to invest in motorcycle racing.

It should perhaps come as no surprise that little came of the sponsorship conference organized by Dorna. Dorna's revenue comes from three main streams: TV rights, event sanctioning fees, and sponsorship. The three sources of income are very roughly equal, meaning that Dorna earns around €60 million from sponsorship every year. That is less than the amount which some sponsors spend on a single team in F1. If revenues are to be increased in motorcycle racing then Dorna needs to first pick up its own game, and then start to lead the rest.

Yet Dorna has also managed to build some strong partnerships, which can help point the way to the future. BMW's involvement with MotoGP is an example of how to do it right: in addition to supplying safety cars and other vehicles to the series, BMW earn the right to set up a VIP unit, where they can invite their most important customers, distributors, and business partners. BMW pay Dorna for the visibility the series provides, but above all, BMW pay for the privilege of doing business in the paddock. The continuing partnership between the two is a sign of its success.

Here, it seems, is where the future lies. This is why Philip Morris still pours a very large amount of money – rumored to be upwards of €20 million a year, more than twice what any other title sponsor is said to pay – into Ducati, despite there being no visible branding by the tobacco giant. The only way of telling that the massive hospitality unit which they have in the paddock is affiliated with Philip Morris is because it is probably the only one with any ashtrays inside, and where you will find people smoking. On the outside and inside, it says Ducati. Nowhere does it say Philip Morris, though paddock veterans still refer to it as the 'Marlboro hospitality'.

What does Philip Morris buy if not consumer exposure? They buy a place to do business with their partners, to invite guests, to schmooze politicians. They invite celebrities to add a touch of glamor, to liven up the atmosphere and help grease the wheels of commerce. Excellent food, fine wines and good company, all surrounded by the excitement of motorcycle racing, with the added frisson of danger which accompanies the sport. This creates the ideal environment in which to do business, and Philip Morris is deadly serious about the business it does there.

Ducati are not alone in this. Both the LCR Honda team and the Marc VDS Racing team have a solid understanding of why sponsors invest in racing, and work to find ways to help their sponsors make money. LCR, in particular, are an example of how to do it right. They have a dedicated sponsorship manager who has proved his worth over and over again. LCR do not tell their sponsors what they have to offer, they ask their sponsors how they can work together to provide both parties with the benefits they seek. Marc VDS have been following in their footsteps, listening to sponsors and helping them do business, rather than taking their money in exchange for stickers on the bike.

This, above all, is the biggest misunderstanding in the paddock. The size of the sponsor's name on the bike is the least important issue in any deal. The bikes may look like mobile advertising hoardings – though not very good ones, as they have both a very limited surface area for putting on brands, and the bikes spend a lot of time leaned over, rendering sponsor stickers entirely invisible – but in almost every case, that isn't why a sponsor is putting money into a team.

Why do companies invest in sponsoring teams? Because they believe it will enhance their business in one way or another. The bike livery – another hangover from the tobacco era, when sponsorship was aimed solely at reaching end consumers – is just a small part of that equation. Offer a sponsor a place to invite his business partners, give him the tools to do business in the paddock, and sponsors see the return on their money. Above all, it is about creating an environment where companies can come and do business, make more money than they are putting in. That means giving the sponsor's guests the full Grand Prix experience – showing them round garages, watching practice and the races with them, explaining what is going on, pointing out the finer details to them, giving them a taste of racing, making them want to come back for more. One team told me they made €30,000 euros one weekend, just from helping a sponsor show around their distributors. The local salespeople who had come as guests left with more examples and information to help sell their product, causing the sponsor to increase their contract and the money they put into the team.

What neither Dorna nor most teams seem to understand is that MotoGP is a platform which can be leveraged to help make more money. Sponsors have an incentive to put money into a team, not just for the exposure they get, but for the contacts they make, with both the sponsors of their own team and with sponsors of other teams. There is much to be gained from the idea of a business club, a collective facility where all team sponsors can meet and mingle. The MotoGP weekend itself offers a lot of opportunities for sponsors, manufacturers. The US distributors get this best of all, seizing the gathering of a large group of bike fans to showcase their models. Ducati Island remains a huge crowd draw at the American rounds.

The idea of a platform can be built out even beyond the paddock. Currently, Dorna negotiates its own deals for the title sponsorship of a MotoGP event, but this misses out on local opportunities. The TT Circuit at Assen is desperate to work with Dutch beer giant Bavaria, whose marketing arm revolves around sponsoring and organizing massive events. If Bavaria were involved, they would bring money, not just to the race track and Dorna, but also to the massive party and vast list of events which happen in the town of Assen. They would invest more heavily in promoting the event nationally, which would bring in even more visitors, to both the region and the track. This means more ticket sales and more revenue for local businesses, and more tax raised locally. That, in turn, means circuits can pay a higher sanctioning fee, meaning more money for Dorna, and ultimately more money for teams.

What MotoGP teams really need is to start thinking seriously about how they make money. Concentrate on their sponsors, work with professional sponsorship executives, listen to what their sponsors want and treat them like business partners. Do that, and more money will start to flow into the sport. When more money starts coming in, then the focus in the technical regulations can shift away from cost-cutting and on to safety aspects and attracting more manufacturers and participants. With rising budgets, more teams can afford satellite bikes, and factories do not need to subsidize the bikes they provide so heavily. When it becomes possible for factories to cover their costs from sponsorship, they can spend less time persuading their boards of the marketing and R&D value of motorcycle racing. That means pushing for more freedom, not less, and looking at racing from an entirely different perspective. Racing can become an attractive proposition, not an expensive loss leader.

Of course, it's all very well for me to sit here and pontificate on what the teams in motorcycle racing are doing wrong. If it was that easy, the teams would be swimming in money, and I would be fretting over what color my second Bugatti Veyron should be (or more realistically, having the garage extended again to make room for a fourth Honda RC213V-S). But the point is that this is a multi-million dollar industry, which should be populated by professionals. The team managers, engineers, mechanics, riders are all right on top of the sporting and technical side, but they fail utterly when it comes to the business side. Until they realize that motorcycle racing is a business first and foremost, then entertainment, and then a sport, they will be doomed to struggle for cash. That means asking more and more money from riders for a seat, it means suppliers and staff going unpaid, it means dismal salaries for very long hours and hard work.

Motorcycle racing deserves better. But to get what it deserves, it has to understand that it is all about money.

... fan and enthusiast's perspective, world championship roadracing seems almost completely incapable of penetrating arguably the biggest potential market in the world. It's like I live in a roadracing dead-zone, with little-to-no awareness of the sport. This has been discussed to death many times of course, but with such a massive black hole of disinterest (in a country with multiple WC rounds no less!), America seems like an obvious sleeping-giant that may or may not offer some resources should Dorna ever understand and be able to exploit this market.

I guess countries need characters that will raise the profile. Years ago in the UK we had Barry Sheene; he entered popular culture, even doing cologne adverts on TV! If you said the phrase 'off down the high street like Barry Sheene' everyone knew what you meant. I bet he was more well known than Lewis Hamilton is now.

Sheene was the perfect storm, an excellent (but not dominant either) rider, a cheeky-chappie and good looking, a sponsors dream.

Trouble is now (and I know the US model is different) we have lost MotoGP from free to air TV, viewing figures have plummeted (by circa 80%) and I think even if we by some miracle got a Brit WC, no one would take any notice except the 200-odd thousand like me who still watch. The WSBK viewing is even worse, I read only 15,000 turned up at Donington this year, where is our Carl Fogarty now when we need him?

Its gloomy and I don't know what the answer is (like David really) but as the sponsors dipped out I guess Dorna had to take the wad of dosh from BT and hang the future viewing in the UK.

Oh well, hopefully Dorna will be inspired by David's article to do.... something!

Unfortunately, car racing (and especially F1) will always be more popular than bike racing. Us fans of bike racing will continue to think that's stupid, and point towards how much more exciting it is to actually see the human racer, see his body move on the machine, see the skill involved in wrenching massively powerful machines around the track, rather than the disembodied and yawn-inducing F1, Supercar, rallycar racing that generates all the audiences and sponsorship money. But the sad fact is, there are a LOT more cars on the planet than bikes, and a lot more car racing, of all types, than bike racing. This is not going to change.

The world is moving at a rapid pace, Dorna has fought a losing battle for many years to juggle the expectations of the Major Factory players in GP racing versus providing a saleable product for the world to consume. I think the changes coming up in GP are going a (too) small way towards a more even playing field, but as long as people like Nakamoto cry blue murder and threaten withdrawal when it looks like their big money advantages are being pulled away from them, the harder the job is. Do the factories need racing any more ? Does the whole race on sunday, sell on monday hold true anymore when the fastest growing market segments are no longer Factory branded 600 + 1000 racing bikes, but more likely dual sports, cruisers, and scooters ?

WHat would be good for racing: Lets see Moto1 - Sealed engines...combined rider/bike weight limits...choose your own tyre....Prototype frames, suspension, and standard electronics. Ban traction control.

What's likely: Honda and Yamaha continue to dominate, MM wins the next 5 titles in a row while Jorge still can't quite catch him, and Vale keeps circulating until the cows come home (albeit at an improved pace) while some up and comers like Jack Miller and Maverick Vinales attempt to upset the status quo on lesser machinery.

Ah well... I'll still watch, cause I love watching these amazing bikes and the more-amazing talents of those able to do stuff I can only dream of on my bike. And monday morning after the sunday night the races have aired on my TV, I'll still be taking corners a little quicker than I should. Cause these guys make you do that.

Somehow the "faithfull" and the MoCo need to be attracted. That's a big ask and I have no idea how to do it as even an appearance of the now discontinued XR1200 failed to boost attendance at AMA and the Indy Gp in my opinion.

What large manufacture in Europe is left that could pick up Harley as its boutque brand? LOL.

This is a fantastic analysis - companies pay huge money for consultancies to tell them less than this - and I hope Dorna reads it, and understands it.

One fundamental issue, at least in the States, is that road-going motorcycling here is perceived as incredibly dangerous, and therefore a fringe activity with little reach. A bike is about 1/3 - 1/5 the cost of car (and now, about the same cost as a high-end bicycle!), also - so there is just less money floating around the motorcycles. If you look at the trends in transportation you'll see less and less interest in the qualities that make motorcycling great, and more and more interest in non-driving-related things.

David's point that motorcycles are well-associated with other products deemed risky or physically "aggressive" is incredibly powerful, though.

I also note that I'm aware of more tracks closing or featuring operating restrictions (e.g., Laguna Seca), making just lower-level participation more and more difficult.

And truthfully, the economy still blows and motorsports are ex-pen-sive, even motorcycling. Not everyone has $15k to run a bike for a season...

I follow F1 just a closely as I follow MotoGP, and they have their own money issues. Two of the teams didn’t even make it to Austin; when is the last time teams just didn’t show up to a round of MotoGP? There was even talk of a boycott from the midfield teams over how the pie is split. As was pointed out in the article, F1 generates a ton of cash, but they definitely have some things to work out to ensure the long term viability of the sport.

How a factory team in a world championship goes unsponsored is beyond me. Mr. Emmett, your article brings to light a problem I did not realize. I ASSumed all hospitalities/sponsors were as the Ducati relationship with Philip Morris. There are other models that work and we could talk about why Dorna's doesn't. I have so much more to say, but the bottom line is the bottom line.

When I interviewed the principals of Target Chip Ganassi Racing for an article a few years back, they talked about the importance of the Sonoma round of the IndyCar series. It is held (for those outside of California) in the wine country of Northern California, and is one of the most beautiful places in the U.S. Target's corporate partners (or, let's be much more precise, the stupid-rich people who own and run those companies) would gather for that race and meet and hang out, drink wine and play golf and party for days before and after the event. The race itself was an excuse for a big business meeting, and a lot of business got done there.

At that level, the business club model makes sense.

What I also learned is that the business club model has severe limits. A lot of the business that took place there had nothing to do - or little to do - with funding Target's IndyCar program.

Target uses its IndyCar program as a lever to pry more money out of the companies that vend in its stores. Things like shelf placement, end caps on store aisles, presence in newspaper ads, all are negotiated like the decal placement on the cars. Not one - not one - of the sponsors on Target's Indy cars are simply giving money to the team; it's all part of a much larger exposure package that a huge retailer like Target can offer. Motorsport is sort of the background against which the negotiations take place, another element to throw into the mix of an incredibly complex business deal. It literally takes one of the biggest companies to ever exist in the history of humanity to leverage motorsport into something for which a halfway attractive business model can be made.

And that's for Indy car racing, something that every human being in the U.S. has heard of and is aware of, something that gets front-page coverage on the sports section.

For every business executive who thinks hanging around in a MotoGP paddock is cool, there are scores who would rather chew their own arm off rather than attend a motorbike race.

And if you're trying to sell your team as a business club, you are now competing not only against all other sports, but against all other human endeavors where such a club might be founded - tennis, civic organizations, the opera, etc.

The BMW model is a painful illustration of something else. BMW's involvement with MotoGP has not led to what we actually want to see - a BMW bike and team. It's always more cost-effective to sponsor a race or buy a banner than it is to actually put money into a team.

Racing relies on the investments of those who make racing machines and related equipment. Anything else is a bubble waiting to burst ...

Im not a specialist but it seems to me that one of the reasons why the revenues are low is because the sport is not enough popular.
And how this sport can increase its popularity if people have to pay to watch it ?

Look at what Red Bull did these past years: multiply the incredible videos, multiply events, touch the "extreme sport" audience.

Write motogp on youtube and you have almost nothing. Best slow motion ? Seriously ?

MotoGP has something to offer that car races don't - its hugely more telegenic. Not only can viewers see the entire rider's body (as said above) and not just a bobbling head, the participants are much more gladiatorial, and the physics of the machines are much more evident to even the casual watcher. By comparison, even watching an F1 race is like watching paint dry.

As David has so insightfully pointed out, attracting sponsorship is not even about selling motorcycles or space on the carbon fiber, its about the spectacle and the buzz. Even the most jaded exec will open his eyes to slo-mo fairing-bashing corner action on the jumbotron.

DORNA really shot themselves in the foot by restricting all video of past events, thereby hermetically sealing the sport off from new fans. Talk about being stuck in a bygone era - at a time when every PR pro on the planet will murder for some content that might go "viral", DORNA is busy inoculating every 30 second snippet that pops up. Self-perpetrated buzz-kill!

I understand a desire to protect your content but Dorna are almost pathalogical. Not only can you not ever see an entire race, anything but there own adverts for events are removed.

Recently, I wanted to post a (maybe) 5 second clip to show a visual of the counter rotating crank of the M1 in slow motion. Despite the alleged allowance of fair usage etc.., the video was blocked by Dorna for copyright infringement. How stupid - they could have had a clip of the M1 showing up with the multitude of searches for the new R1 - free advertising. But no, protecting those 5 seconds of (MotoGP branded) in is Dorna's focus above apparently bringing money into the sport

One of the biggest ways Dorna shoots themselves in the foot is by purposely limiting the exposure of MotoGP. Things like pulling content off of youtube and the subscription model on motogp.com is hurting their own brand. Why would you want to purposely hide your product from a vast ocean of potential new fans? Every spectacular crash, every dragging elbow , every wheelie, every fairing to fairing clash should be plastered all over youtube. Let any and every fan put up their own videos on youtube, it’s free advertising for your product. There are a million car/moto blog sites where all they do is embed youtube videos showing these types of videos, so don’t deny them showing MotoGP clips as well. Expose your product to as many potential new fans as possible. People will stumble upon MotoGP if you let them. There isn’t a 15 year old boy that won’t be intrigued by seeing these action clips.

Then, once you’ve pulled a new person in, don’t charge them to actually view the races on your website. By charging a subscription on motogp.com you’re almost guaranteeing you will only keep the die-hard fan and will chase away the new fan where the TV coverage is sparse (like in the US). Nobody’s going to invest financially in a subscription before they’ve invested emotionally in any of the races/racers. It’s a broken system to charge your own fans to watch races. You should be encouraging as many fans as possible to watch, then when viewership increases charge more for TV rights, for advertising, for sponsorship. Make the companies pay for it, not your own fans.

This model has worked for the National Basketball Association. They allow all fan-made videos on youtube knowing full well that it greatly increases the exposure of the NBA, especially internationally where the NBA has grown into an incredibly popular global sport. And just recently the NBA signed a new TV contract worth a reported $24 billion (180% increase over the prior TV contract), so the model can work.

A lot in comparison to any other top form of racing. These guys put on three times the show, and always have, that alone waters down the honey and spreads it thin.

As for under selling.. yahmaha admirably ran without any title sponsorship for two or three years recently to avoids doing just that. I'm not sure if they weathered the storm or finally caved, but they are now fully decked. I'd give then some credit.

As for hiring the best marketing people. They would if they could but the best don't work for free.

Motorcycles are in an interesting place, where what it would cost you to hire someone is a decent chunk of your budget. To pay a salery of say 180k-200k fir just an average marketing guy with experience would cost you 300k as an employer after figuring taxes etc. And commission deals won't cut it in a dry market.

So it would need a collective effort as every team could not afford this for themselves. Dorna could but for them it's finder's keepers, any sponsorship they gain is theirs.

It's tricky deal but the competition begins with getting sponsorship, it's just made all the harder when every team is also competing against dorna who lets face it can offer much more for less.

Your statement that motorcycle racing is a business first, entertainment second and sport third isn't quite accurate. Any entertainment value derived from motorcycle racing is a result of the sporting nature of the activity. I doubt that most readers of this site would be enthralled with a scripted "reality show" MotoGP similar to what is known as big time wrestling here in the USA (I may be wrong on this point but I like to think the best of people). Most of the gimmicks in today's motorsports are a result of this separating sport from entertainment and devalue the sport in fans minds and frustrates them. Sports can be entertaining but entertainment isn't a sport.

Sports fans, usually, are people who have experienced doing the thing that competitors do in a sport, or they are married to a fan. The basic reason that F1 or NASCAR is so much bigger as a sport than MotoGP or flattrack racing is simple, how many people drive cars compared to how many ride motorcycles? Them's the numbers and they ain't gonna change.

There seems to be one piece of information missing in that context.
TT Assen wants to work with Bavaria, does Dorna know about it? They don't want to talk with that sponsor or what?
Besides that, great article as always.

Great article David, I agree with all of your points. But I also think we need to focus on increasing participation from the bottom up as well. Getting people involved in the sport will undoubtedly put pressure on Dorna to offer better coverage in the USA and other hot markets, which will then lead to more viewers, and so on. It is also a surefire way to grow revenue and profits.

I recently wrote an article about how I think MotoAmerica can do just that (http://wp.me/p5gIrg-5). Let me know what you think.

Too many rules raises the cost and barrier to entry, bikes or cars. Have a minimum set of rules and let each team figure out how to go fast. How does PBM gain the last 2 seconds to the factories? With the current rules, they have to spend money on what the rules will allow. Get rid of the regulations, and maybe they come up with novel ways to close the gap.

Not sure exactly what the 1.3 billon of turnover means in comparison to Major league baseball but they announced revenue of 9 billion dollars this year and the NFL is a good bit more than that. We see F1 as serious big bucks but these two USA only sorts seem to be several times more profitable. In comparison bike racing is really small time:( Really too bad.

Dorna could do a lot more to boost it,going to pay to view is going in the wrong direction. Short term boost in money, long term death. Boxing did this and now the sport is dead.

With ball and ball/stick sports the total revenue is the total revenue the sport has to play with and represents the incomes of teams, etc. With F1 and MotoGP the main factories spend 400M/80M per year to create machinery to participate that is completely separate from the revenue that the sanctioning body sees from the organizing and broadcasting. Its one of the reasons why F1 or MotoGP without the factories would become a shell of its former self. They invisibly provide the backbone the series works around.

>>Dorna could do a lot more to boost it,going to pay to view is going in the wrong direction. Short term boost in money, long term death. Boxing did this and now the sport is dead.

I can understand how Dorna behaves going after short term cash with their owners requiring concrete cash flow but that does not excuse them from putting themselves there in the first place. All of the major world sports (from my perspective in the US) that are many times bigger than MotoGP are all on free to the air broadcasts. That should be a telling indicator as how to cultivate growth but maybe not. I'm sure those millions of potential new fans in the southeast aisa region that buy scooters won't have money to pony up for pay tv broadcasts.

I perceive that the popularity aspect is the apparent point of difference with what I do on Sundays whenever I can.

F1: The cars are *clearly* special based on any layman observation.
Isle of Man TT: The Course! Death defying riders. Once a year.
Rally: Off Road at massive speed, again the courses and danger.
MotoGP: Short track racing on bikes that don't look terribly different to my Fireblade, or given that mine is an SP model, it has the same brand names written on the bike (Brembo, Ohlins). A Ducati or something else slightly on the exotic side even more-so. A layman observing this....well....it's not that different to the layman.

I think it's became worse since they started restricting everything from being mechanically different. I think they needed that.

That to me is a problem and I think Dorna gets it at some level, hence their recent harping on about 'Max lean angles' ra ra ra.

Get more exposure in the US than Motogp. Last I heard they ain't real. But you see them every where from baby blankets to cartoons. For goodness sakes our current champion is just barely out of his teens.

Why can't Dorna capitalize this in one of their biggest potential markets? Whats wrong with a motogp cartoon, ala speed racer. Look at all the block buster movies based on kids cartoons from 10-15 years ago. What's wrong with a Marc Marquez baby blanket. There are plenty with nascar stars on them. My 17yo daughter has a Rossi flag from years ago. Wrote a paper about him in a class. We are doing our part.

It's all about the internet, and Dorna isn't the only entity having a difficult time figuring it out. I read an interview quite a while back with Matt Stone and Trey Parker, creators of South Park, in which they were asked about internet distribution. These guys aren't exactly Luddites or the type that would screw over the fans for a buck (so I've gathered), but their answer was interesting. In a nutshell, the problem with internet distribution is that nobody's figured out how to sell it yet. Marketers and content creators can't agree on the value of internet distribution, largely because it's so difficult to track eyeballs, and everyone's stuck in a traditional television commercial mindset. They seemed confident that it would eventually be figured out.

It almost has to be. With the music industry as a history lesson--never mind the juggernaut that is YouTube--the future seems to be decreasing value per view but to an exponentially increased user base. The internet is taking over content delivery, and traditional cable/television networks will eventually adapt or die. They certainly have some time, but this is coming eventually. The cord-cutting movement is in its early stages, but the trend is definitely increasing.

So how will Dorna, and therefore the MotoGP circus, survive this shift? They're going to have to pull their collective head out, to be frank. David makes some excellent points in this article about the opportunity to turn MotoGP into summer camp for corporations, and this is all well and good, but the overall popularity of the sport is still going to be the foundation of any means of fundraising. In short, people need to know that MotoGP exists in order for there to be any reason for any business to be interested in spending their money on it. Dorna's current playbook is like a "How-to" in failing at this mission.

We seem to have this discussion every year, and the point is always raised that Dorna is totally dropping the ball by policing YouTube and the like for fan videos, not releasing races for free, bottling up past races--it's like they don't want people interested in their product. The result: Living in the northwest USA--and even already being a motorcycle rider--I had no idea MotoGP existed until watching Faster in 2005! I'll put on a race sometimes, and a crowd will gather. "Holy crap! Look at that!" "These guys are crazy!" "What IS this!?" None of them have ever heard of motorcycle roadracing.

I'm one of the few that actually likes the motogp.com subscription, as it's actually quite the value for the quality and depth of coverage. It might be too expensive, though, in the motorcycle-crazy developing countries that Dorna needs to branch out into. They need to either lower the price altogether and grow the audience or figure out a tiered subscription model whereby those without €100 per year to watch can maybe catch just the races at a lower resolution or something.

In the meantime, they'd do well to look at the kind of exposure companies/sports are getting on new media. Look at the exposure Red Bull and GoPro got from Baumgartner's skydive, or the New Years stunts, or the various short YouTube clips of various awesome things. These would be excellent ways for Dorna to both recruit sponsorship and grow the viewership at the same time. Imagine Monster or Red Bull plastering YouTube with awesome clips from MotoGP races or behind the scenes stuff. Why isn't GoPro paying a fortune to have their cameras all over the paddock and the videos plastered across YouTube? It would be a total win-win.

Lastly, they're competing with a LOT of piped-in entertainment nowadays, and attracting eyeballs might require not only that people know that MotoGP exists, but that they care. I don't know about how things are in the rest of the world, but the US is addicted to reality television. How about a reality show/documentary series that follows the paddock or a team throughout the season? Something like Inside the Outdoors for motocross. They could syndicate it and also stream it with ads right on motogp.com.

I'm running out of steam here and better stop before this turns into an essay. My point is, though, that Dorna is going to be faced with some tough choices in the medium future as the exclusive pay-TV deals that seem to be keeping them profitable at the moment become worthless and expire. They're going to have to start competing for the increasingly short attention spans of a global audience, and there are plenty of examples out there now of how to do this very effectively in mutually beneficial ways. It's going to be interesting how it all plays out.

Dorna need to take inspiration from various bits of the entertainment industry and realise that in a world of infinite choices, a strong marketing push is vital and you need exposure wherever you can get it. Rhetorical question: are the pop band One Direction popular because the public considered all music acts equally on absolute merit and lots of them came up with the same answer at the same time, or because of marketing? When the music charts moved from CDs and vinyl to downloads and streaming there was some hope amongst the niche sections of the music press that the charts might turn out to be more interesting ('better') with the public having more choice - what actually happened was that the sections of the public who were going to make eclectic selections did so in a world of much larger choice, diluting their influence, and the marketing pushes dominated things even more than before.

When it comes to YouTube and past races, Dorna need to view the sport like a pop music single - massive marketing push when it comes out, but a week later it's ancient history. The live coverage footage of a race is very important at the time it happens, but once it's done then its value drops massively compared to that moment. How many people who saw them at the time are still watching the races we've already had this year? Almost no-one. BUT for a potential new fan of the sport who doesn't know it yet they're by far the best way to advertise if the masses can see them.

When it comes to TV coverage MotoGP/WSB need to be in a mass market to get new fans in - a pay TV deal is simply too limiting. You're not reaching a better 'select' audience on pay TV because the select audience would be watching on free-to-air TV anyway, along with ten times that number of casual fans who might turn out to include some who get financially involved. If you're on pay TV you need an enormous marketing push - see The Wire, Breaking Bad etc, shows that had a lot of money put into them - in order to succeed.

The observation about traditional TV programming mindset is an interesting one. In the UK, despite the hugely increased number of TV channels, viewing figures are still dominated by the 'main' four channels as they were twenty years ago [when they were the only channels]. A friend who used to work for the BBC told me that the public were adopting on-demand services and TV via the internet a LOT slower than anticipated and that 90% of viewers are still watching TV live at the time of broadcast through a TV set (which helps explain why races running to time for TV are such an issue). Never underestimate the viewer's intelligence but it seems that in a world of too much choice the public need to be told what to watch to an extent - which is why marketing works.

HBO 24/7 of the NHL Winter Classic comes to mind here. Actually this could be interesting for the lower rung teams who are mired mid pack and thirsty for exposure. Granted there is far less value (value as in desire) to following the escapades of Avintia than there is to HRC Proper but I do assume they would be more willing to participate for the exposure alone.

Formula One gets its obligatory 20 seconds on Sports Centre, that's the building block. At least even for 20 seconds there is an invasion (piped in, good term BTW) motorcycle road racing is not even afforded the opportunity to captivate. It's completely sealed off except to those who explicitly seek it.

I went to Indy and Austin for the inaugural MotoGP races in '08 and '13. I have also been to Montreal for the F1 race in '11. The biggest difference to me was how many more families and women were at the F1 race than at any MotoGP event. Look around you the next time you go to a race. The two things you will see are people that ride sport bike motorcycles and very few women/children.

Until society at large in big market countries start to ride sport bike type motorcycles for transportation instead of recreation, the number of people who can relate to the moto racing spectacle will remain low. Cruiser riders are less likely to like sport bike racing so even the general motorcycle riding population is not the true indicator of the potential market segment. That is a fact, not a judgment.

Until women and families are attracted to these events (probably for reasons other than the racing), the ceiling for revenue and opportunity will continue to be low. That is, at least in as much as the sport of motorcycle racing can generate interest from the masses (that sponsors and media outlets will pay to reach).

Right now, the target populations are enthusiasts like us and rich enthusiasts who prefer the racetrack over the golf course to pitch their business deals. Both populations are limited in scope and revenue potential.

First, I'd suggest NOT using F1 as an example that should be emulated. With two teams in receivership at present things are far from great there. Add in the sickening corruption in the sport and even FIFA starts to smell better! Second, the sport just costs too damn much. The factories have almost unlimited money to spend and they spend it to the point where only huge conglomerates can compete. Honda has plenty of loot from other products (cars, lawnmowers, etc.) while Yamaha has their own (musical instruments come to mind) and Ducati is now owned by Audi in addition to getting the P-R loot. Third, the sport has become too much about the moto and not enough about the rider controlling it - maybe because they no longer control it so much? Too few have any chance of standing on the podium, so why would a sponsor put money into a non-competitive team? The big three either don't need or already have enough money to dominate MOTOGP. When you not only have to have SKY TV in Italy to watch the races, but also have to pony up for the extra cost viewing package, who is watching this stuff? The sport is reaping the benefits of a long series of short-term, short-sighted decisions made worse by worldwide economic malaise. What would happen if a deluge of cash suddenly washed into the sport? Would we see more riders with a chance to stand on the podium? I doubt it. Where is the benefit to sponsors involvement with also-rans? Is just hanging around the sport, inhaling the exhaust fumes really that attractive and worth millions? I believe the sport needs to actually get smaller and back to the passion for racing rather than a passion for making huge piles of money. Hedge-fund managers might make a lot of dough but what they do is not sport and not very interesting for a TV viewer.

I wondered a lot about that, too, until I read this article and David pointed out something that I (and probably most of us) overlooked. Marlboro, I think, is still in much the same position that it was - utterly unwelcome in most neighborhoods. A hospitality with ashtrays and a smoking tent - I wonder how happily Marlboro's setup would be received at a non-motorsport event, especially if you're the company paying big $$$ to be there with your hospitality and then you get stuck next to the smoking section. Motorsports paddocks might be among the few places left where tobacco's presence is still tolerated. So the MotoGP paddock might not be Marlboro's first choice of where to bring corporate partners, etc., but one of the few left it can choose from - a choice other industries don't have to make.

MotoGP can't build a world-class sponsorship country club in a middle-class neighborhood. Dorna need to raise sanctioning revenue and media revenue by getting fans/bureaucrats in the seats and eyeballs on the TV/internet. Fans and bureaucrats won't show up without relevant manufacturers and sponsors, in most instances, and, since Dorna don't have the money to pay companies like BMW and Mercedes/AMG (MV Agusta) to show up, nor can they fund specialty team/manufacturers analogous to McLaren and Williams, Dorna feel compelled to focus on the cost/benefit structure in the rulebook.

If Dorna can't pay people to play, the rulebook takes center stage. Good rules with market-relevance will attract investment, though revenue-sharing may be weak. Entertainment rules with low costs also tend to attract manufacturer interest because anemic revenue-sharing may cover the cost of competing, and the benefits of entertainment can outweigh technology branding.

Maybe Dorna have chosen the latter because they are incapable of doing the former. Maybe Dorna's investors are greedy and unimaginative, and they have delusions of NASCAR-grandeur. Maybe BMW, Aprilia, and MV Agusta have all requested an entertainment model because they don't believe any particular technological strategy (e.g. fuel efficiency) drives the motorcycle market.

Dorna are working in the right place, but I'm not convinced they are making the best decisions. The end of this season has been quite entertaining, but I'm not sure fans will remain interested for long, if the bikes are all 81mm 4-cylinder 1000cc machines. Furthermore, there is no reason to choose between entertainment and technology or variety of equipment. They're always neglecting 50% of the viewership, manufacturers, and sponsors when they operate as if technology/variety and entertainment are mutually exclusive.

First of all let me clarify that I do not really understand business. Second of all let me also say that I am not sure if I have even understood David's article properly. But on the basis of my assumption (which could be totally wrong) that I have understood at least some parts of the piece, I have a little problem in the way in which the article looks at the issue of sponsorship. As has already been said in the thread by others the F1 example is at best tenuous since this year two teams have folded up and the whole history of F1 even in the days of tobacco sponsorship is replete with examples of various teams winding up and leaving the sport for good. I would also be very careful in drawing parallels from other sports as well because in a sport like football where zillions of dollars are poured in, the visibility factor is crucial. From the jerseys that players wear to the hoardings by the side lines, sponsors find lots of space where they are constantly visible.

I think the fundamental problem with motorsport today is that there are people who are very greedy and the general structure of the sport does not have the means to support that kind of avarice. Most importantly the sport does not create a community, which is strange because they travel together and live in the vicinity of each other through out the better part of the year. This abject lack of concern and the involvement of factories who want to use racing as R and D (a flimsy excuse to cover up the intentions of one upmanship; otherwise R And D can be done without involving themselves in sport as is evident from many technological benefits that are seen on road going vehicles from companies that do not have a history of motorsport participation) continuously pushes costs up till smaller teams finally throw in the towel and leave for good. A good example of what I am saying can be seen in F1. The money that goes into aero research is phenomenal and has very little or no bearing for road cars given the fact that road cars are not even remotely like F1 cars. Similarly the exotic fuels and oils are of no use in road cars. The same can be said of motorcycles as well. I think the time has come to think out of the box. In the box solutions will work for sometime before hitting the same end; bankruptcy and exit.

With spanish (no alcohol)beer Estrella join Marc VDS next year, I think that must be a family vision not advertise Stella Artois in the MVDS bikes and cars. No legal prohibition on these matters in F1 (Williams) and also MotoGP.
Am I correct?
Braaaap!